Is Capitalism God-Ordained?

[ThomasJMullally]

So are you saying that doing something to try to avoid the boom-and-bust pattern of the 1800’s was wrong? After the Panic of 1908, it took over twenty years for another Panic to occur and that was not the fault of the Federal Reserve. They have made some serious moves since then that have been judged beneficial. They have also made some serious mistakes. They are not perfect, and each mistake has been an opportunity to learn. Alan Greenspan has said that fear was not prominent in the thinking of the Federal Reserve. But after the housing debacle, he realized that this omission was a mistake.

Weren’t you one of those clamoring for pure capitalism? OK, Panic '08 was scary but worked through fast… didn’t it take Morgan and other titans to chip in? (Something that can’t happen lately… a super-rich patriot is as rare as an honest politician.) Result in 1912… they designed the Fed.

In a record half bad and half good, I definitely have to err in favor of fewer systems and cushions… who knows how no Fed would have changed history, but given the fact that it is an integral part of the giant merry-go-round at this point, I have to regret it same as freeRad… And sorry, but Greenspan is way overrated. His smooth-talking was always just a lullaby song for the masses.

 

[magnet]

What moves have they made that have been judged beneficial? And judged beneficial by who?

The problem is the Fed doesn’t learn from its mistakes and every time they make a mistake they are given more power and latitude.

Even Ben Bernanke admitted the Great Depression was the Fed’s fault.

The Stock Market Crash that started in 1929 was due to bursting of a huge bubble in “irrational exuberance”. The Fed tried to minimize the damage, but was not successful.

Many people blamed the Fed for failing to stem speculative lending that led to the crash, and some also argued that inadequate understanding of monetary economics kept the Fed from pursuing policies that could have lessened the depth of the Depression.

1933: The Depression Aftermath
In reaction to the Great Depression, Congress passed the Banking Act of 1933, better known as the Glass-Steagall Act, calling for the separation of commercial and investment banking and requiring use of government securities as collateral for Federal Reserve notes. The Act also established the Federal Deposit Insurance Corporation (FDIC), placed open market operations under the Fed and required bank holding companies to be examined by the Fed, a practice that was to have profound future implications, as holding companies became a prevalent structure for banks over time. Also, as part of the massive reforms taking place, Roosevelt recalled all gold and silver certificates, effectively ending the gold and any other metallic standard.

1970s-1980s: Inflation and Deflation
The 1970s saw inflation skyrocket as producer and consumer prices rose, oil prices soared and the federal deficit more than doubled. By August 1979, when Paul Volcker was sworn in as Fed chairman, drastic action was needed to break inflation’s stranglehold on the U.S. economy. Volcker’s leadership as Fed chairman during the 1980s, though painful in the short term, was successful overall in bringing double-digit inflation under control.

 

[ThomasJMullally]

The Stock Market Crash that started in 1929 was due to bursting of a huge bubble in “irrational exuberance”. The Fed tried to minimize the damage, but was not successful.

Many people blamed the Fed for failing to stem speculative lending that led to the crash, and some also argued that inadequate understanding of monetary economics kept the Fed from pursuing policies that could have lessened the depth of the Depression.

We need Seraphim to bring out the account in Friedman’s “Free to Choose”. As I remember the Fed was so inept, that they drastically contracted the money supply by one-third in the early thirties instead of expanding it! That was direct cause of Great Depression (instead of just having a “Panic of '29”.)

 

[freeRadical]

Weren’t you one of those clamoring for pure capitalism? OK, Panic '08 was scary but worked through fast… didn’t it take Morgan and other titans to chip in? (Something that can’t happen lately… a super-rich patriot is as rare as an honest politician.) Result in 1912… they designed the Fed.

Of course they created the Fed. The government was afraid of individual men having so much power.

In a record half bad and half good, I definitely have to err in favor of fewer systems and cushions… who knows how no Fed would have changed history, but given the fact that it is an integral part of the giant merry-go-round at this point, I have to regret it same as freeRad… And sorry, but Greenspan is way overrated. His smooth-talking was always just a lullaby song for the masses.

Not to mention, if you read Greenspan’s memoirs, he knew that the bubble was about to burst at the end of the 90s. But he said he couldn’t do anything about it because if he put the brakes on during such an unprecedented growth, there would have been enormous public outcry.

 

[freeRadical]

The Stock Market Crash that started in 1929 was due to bursting of a huge bubble in “irrational exuberance”. The Fed tried to minimize the damage, but was not successful.

Many people blamed the Fed for failing to stem speculative lending that led to the crash, and some also argued that inadequate understanding of monetary economics kept the Fed from pursuing policies that could have lessened the depth of the Depression.

1933: The Depression Aftermath
In reaction to the Great Depression, Congress passed the Banking Act of 1933, better known as the Glass-Steagall Act, calling for the separation of commercial and investment banking and requiring use of government securities as collateral for Federal Reserve notes. The Act also established the Federal Deposit Insurance Corporation (FDIC), placed open market operations under the Fed and required bank holding companies to be examined by the Fed, a practice that was to have profound future implications, as holding companies became a prevalent structure for banks over time. Also, as part of the massive reforms taking place, Roosevelt recalled all gold and silver certificates, effectively ending the gold and any other metallic standard.

1970s-1980s: Inflation and Deflation
The 1970s saw inflation skyrocket as producer and consumer prices rose, oil prices soared and the federal deficit more than doubled. By August 1979, when Paul Volcker was sworn in as Fed chairman, drastic action was needed to break inflation’s stranglehold on the U.S. economy. Volcker’s leadership as Fed chairman during the 1980s, though painful in the short term, was successful overall in bringing double-digit inflation under control.

No, the Fed caused the Great Depression by contracting the money supply by one-third during a mild recession. Even Ben Bernanke has admitted this.

 

[magnet]

Weren’t you one of those clamoring for pure capitalism? OK, Panic '08 was scary but worked through fast… didn’t it take Morgan and other titans to chip in? (Something that can’t happen lately… a super-rich patriot is as rare as an honest politician.) Result in 1912… they designed the Fed.

In a record half bad and half good, I definitely have to err in favor of fewer systems and cushions… who knows how no Fed would have changed history, but given the fact that it is an integral part of the giant merry-go-round at this point, I have to regret it same as freeRad… And sorry, but Greenspan is way overrated. His smooth-talking was always just a lullaby song for the masses.

So, if you cannot offer rebuttals to the facts, you attack personalities.
1990s: The Longest Economic Expansion

Two months after Alan Greenspan took office as the Fed chairman, the stock market crashed on October 19, 1987. In response, he ordered the Fed to issue a one-sentence statement before the start of trading on October 20: “The Federal Reserve, consistent with its responsibilities as the nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.” The 10-year economic expansion of the 1990s came to a close in March 2001 and was followed by a short, shallow recession ending in November 2001. In response to the bursting of the 1990s stock market bubble in the early years of the decade, the Fed lowered interest rates rapidly. Throughout the 1990s, the Fed used monetary policy on a number of occasions including the credit crunch of the early 1990s and the Russian default on government securities to keep potential financial problems from adversely affecting the real economy. The decade was marked by generally declining inflation and the longest peacetime economic expansion in our country’s history.

 

[ThomasJMullally]

Of course they created the Fed. The government was afraid of individual men having so much power.

Not to mention, if you read Greenspan’s memoirs, he knew that the bubble was about to burst at the end of the 90s. But he said he couldn’t do anything about it because if he put the brakes on during such an unprecedented growth, there would have been enormous public outcry.

Right… To me, nothing has been straight since then. There was some sputtering recovery under Bush but really, it was all housing. See what you mean, buuuut…

It shows there is anemic innovation on a net basis, since the 90’s. It is not explicity the Fed’s fault, except under some kind of “crowding out” theory. E.g. if people don’t want to borrow for a house at 6%, is it the Fed’s job to keep pushing until the banks can charge only 5%? It’s kind of like a used car salesman who follows you as you walk away from him, dropping his price every ten feet that you walk! Why should the goal be credit expansion? But I think, you can’t blame the Fed, for the whole culture. It is really just this collective idea that we… HAVE… TO… GROW!!!

 

[ThomasJMullally]

So, if you cannot offer rebuttals to the facts, you attack personalities.
1990s: The Longest Economic Expansion

Two months after Alan Greenspan took office as the Fed chairman, the stock market crashed on October 19, 1987. In response, he ordered the Fed to issue a one-sentence statement before the start of trading on October 20: “The Federal Reserve, consistent with its responsibilities as the nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.” The 10-year economic expansion of the 1990s came to a close in March 2001 and was followed by a short, shallow recession ending in November 2001. In response to the bursting of the 1990s stock market bubble in the early years of the decade, the Fed lowered interest rates rapidly. Throughout the 1990s, the Fed used monetary policy on a number of occasions including the credit crunch of the early 1990s and the Russian default on government securities to keep potential financial problems from adversely affecting the real economy. The decade was marked by generally declining inflation and the longest peacetime economic expansion in our country’s history.

I didn’t say he was a disaster, just overrated. His beginnings with the crash of '87 were excellent, only later did he try to use too much finesse, verbally stroking the markets when there was really, little left to stroke.

 

[freeRadical]

Right… To me, nothing has been straight since then. There was some sputtering recovery under Bush but really, it was all housing. See what you mean, buuuut…

It shows there is anemic innovation on a net basis, since the 90’s. It is not explicity the Fed’s fault, except under some kind of “crowding out” theory. E.g. if people don’t want to borrow for a house at 6%, is it the Fed’s job to keep pushing until the banks can charge only 5%? It’s kind of like a used car salesman who follows you as you walk away from him, dropping his price every ten feet that you walk! Why should the goal be credit expansion? But I think, you can’t blame the Fed, for the whole culture. It is really just this collective idea that we… HAVE… TO… GROW!!!

But I can blame the Fed because they are the ones that are supposed to do what is right, regardless of what the public thinks. That is why the Fed is private, supposedly to insulate it from the whims of politics, businesses, wall street, and the public.

We do need to grow, but we can do it without easy credit. Real savings my friend, real savings.

 

[freeRadical]

I didn’t say he was a disaster, just overrated. His beginnings with the crash of '87 were excellent, only later did he try to use too much finesse, verbally stroking the markets when there was really, little left to stroke.

The problem with Greenspan is that he didn’t put the brakes on when he should have, and he knows he should have.

The problem with Keynesians is that they think they can keep the economy in a permanent quasi-boom, but they can’t.

 

[ThomasJMullally]

But I can blame the Fed because they are the ones that are supposed to do what is right, regardless of what the public thinks. That is why the Fed is private, supposedly to insulate it from the whims of politics, businesses, wall street, and the public.

We do need to grow, but we can do it without easy credit. Real savings my friend, real savings.

Well, if we start growing now, we are doing it without easy credit. Several people that I know, threw in the towel and abandoned their credit rating three or four years back. So if things firm up soon, we are set to go for next decade without looking back… .

 

[freeRadical]

So, if you cannot offer rebuttals to the facts, you attack personalities.
1990s: The Longest Economic Expansion

Two months after Alan Greenspan took office as the Fed chairman, the stock market crashed on October 19, 1987. In response, he ordered the Fed to issue a one-sentence statement before the start of trading on October 20: “The Federal Reserve, consistent with its responsibilities as the nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.” The 10-year economic expansion of the 1990s came to a close in March 2001 and was followed by a short, shallow recession ending in November 2001. In response to the bursting of the 1990s stock market bubble in the early years of the decade, the Fed lowered interest rates rapidly. Throughout the 1990s, the Fed used monetary policy on a number of occasions including the credit crunch of the early 1990s and the Russian default on government securities to keep potential financial problems from adversely affecting the real economy. The decade was marked by generally declining inflation and the longest peacetime economic expansion in our country’s history.

Yeah, and then that bubble burst, thanks to the Fed.

 

[magnet]

Yeah, and then that bubble burst, thanks to the Fed.

Is it because they did not do enough or they did too much?

 

[guanophore]

Consume more, use more, trade more, burn more, dig more, etc… that might be productivity to you. Here is productivity to me:

Productivity is when you walk a mile to the store on a breezy day instead of driving. Productivity is when you forget to look at your email. Productivity is when you gaze at the stars. Productivity is when you take the time to thank God, for the best things that you have.

Thomas, you are failing to address the economic question posed to you. I do not disagree that your approach to productivity can create spiritual, emotional, physical and psychological wealth. What is being asked is, How do you BUY something when you arrive at the store a mile away on a breezy day? How do you pay the RENT so you can have a nice place to sit and watch the stars?

 

[ThomasJMullally]

Thomas, you are failing to address the economic question posed to you. I do not disagree that your approach to productivity can create spiritual, emotional, physical and psychological wealth. What is being asked is, How do you BUY something when you arrive at the store a mile away on a breezy day? How do you pay the RENT so you can have a nice place to sit and watch the stars?

Was only pointing out that not every value can be measured in dollars.

There is an article this month in First Things. I hope you subscribe, I think it is excellent, the editor RR Reno is converted to Catholic faith. In the article, a sharp young college student questions whether religious worship comes at an economic cost. By posing the question, he lays bare everything that is wrong with our classical economic calculations.

 

[Lost_Wanderer]

Was only pointing out that not every value can be measured in dollars.

I doubt anyone here really disagrees with this but that doesn’t change the fact that money makes the world go round.

An older person just recognizing that he should have listened to Adam Smith: the invisible hand of the market assuredly negates the quest of profit for most. And in our reality, the folks at the top, they will make the money up and down the line on your transactions.

Depends on how you define profit. Money is but a means to an end even to the people at the top. (One rule we have in our marketing is that there are finer points to knowing what you can and cannot solve by throwing money at it.) I may make a lot or not much depending on who’s looking. But for me, the amount I pay/earn to get what I really want is kind of a second-place factor.

BTW, art for its own sake is what I speak of, not art for fame and money.

Leonardo and Michelangelo say hi. And no, I don’t mean the Ninja Turtles. These people shaped the art world (and with numerous commissions from the Catholic Church itself no less). Like I said, feel free to have no such aspirations but at least understand that everyone has a calling, even to ambition.

As for your planned romantic quest, I cannot but applaud. I pray that your quest will end with the birth of beautiful children. I embarked on similar adventures in my day… it is not how I finally met my wife, but I have to thank God that he let me get through and find my way.

Thanks for that. My situation’s a little more complicated than simply romantic but if you sincerely believe that not everything is measurable in dollars, you could easily care less about the price and the effort for the things you want.

 

[freeRadical]

Is it because they did not do enough or they did too much?

In that particular case, they didn’t do what they should have done. But they wouldn’t have had to do anything had they not created the mess in the first place.

 

[magnet]

In that particular case, they didn’t do what they should have done. But they wouldn’t have had to do anything had they not created the mess in the first place.

What should they have done? Do you know that if they followed your ideas, things would have come out better?

 

[freeRadical]

What should they have done? Do you know that if they followed your ideas, things would have come out better?

They should have never started messing with the economy in the first place. It is hubris to think you can design something that you do not even fully understand.

 

[magnet]

They should have never started messing with the economy in the first place. It is hubris to think you can design something that you do not even fully understand.

In other words, we should have no banking system with no controls on anything. Let the banks print their own dollar bills and let them skip having Federal Deposit Insurance on their accounts. That costs them money. Let them invest in anything they have a mind to including junk bonds. Let them have a high risk investment policy if they so choose, and if they fail, it’s only the depositors who lose out. If they fail, don’t bail them out. After all it’s not their money.

That is pure capitalism. Do you think it is without serious risks?